When safety and money collide

Published: Sunday, January 16, 2011 at 6:01 a.m.

Last Modified: Saturday, January 15, 2011 at 10:07 p.m.

I remain skeptical of the stream of gloom-and-doom predictions the oil industry, business interests and Louisiana politicians continue to deliver in the wake of the BP oil spill.

A report last week by GNO Inc., a New Orleans-area economic development group, reinforces my doubts.

The study makes a less-than-convincing attempt to quantify the effects of the Obama administration’s six-month ban on new deepwater drilling, issued in the wake of the April 20 Deepwater Horizon rig explosion and the massive oil spill that followed.

In gist, the report acknowledges the drilling ban never produced the widespread layoffs the oil industry as well as GNO Inc. had predicted.

But, it says, another bogeyman lurks: effects from the dreaded “de facto” moratorium — the slow pace at which critics allege the federal government has issued drilling permits since the ban was lifted.

That’s the latest catch phrase employed by those who want to get back to drilling — and making money — as quickly as possible despite the major safety concerns the oil spill exposed.

“We conclude that while effects to-date may not be as dire as many Louisianians feared, unless there are significant changes, the future may prove disastrous to businesses, livelihoods and coastal communities,” the report says.

It says small businesses in particular are having trouble surviving — doing so by borrowing money, reducing workers’ hours or cutting salaries — because of the sluggish pace of permitting and resulting slowdown in the Gulf oilfield.

I’m sure that’s happening, but the extent is impossible to discern from the GNO Inc. study. It couches its conclusions in so many disclaimers that it’s hard to take its assertions seriously.

For instance, the study says it is difficult to separate the economic impact of the oil spill, the drilling ban or the “de facto” moratorium because they all happened simultaneously and are “intricately related.” But, based on limited data, it tries to do so anyway.

The report says the number of approved shallow-water permits reached historical averages in October, when the “de facto shallow-water moratorium ended.” Meanwhile, only two deepwater permits have been approved since October — far less than the 5.8 per month issued during the 12 months before the Deepwater Horizon disaster.

The study goes on to say it is “difficult to predict the actual number of rigs which would have been in the Gulf of Mexico had the moratoria not existed. Drilling is a dynamic industry, and rigs are built and removed constantly. The number of permits gives us an idea of rigs that would have been added; however, there is no data available regarding the monthly average number of rigs which would have shut down due to normal industry dynamics. Thus, we cannot assume that every permit approved would have increased the total number of rigs working in the Gulf.”

I do agree with some of GNO Inc.’s conclusions, including the assertion that without stable, reasonable and predictable regulations, the oil industry, along with the businesses, workers and communities like ours that depend on it for their livelihoods, are jeopardized.

And, to its credit, the group makes it clear that improved safety regulations are needed, acknowledging that the BP well explosion was “a tragic accident that, upon analysis, may have been preventable with different systems and procedures in place.”

Has the oil spill hurt? Yes. And many of those who have suffered have suffered intensely.

But despite continued pronouncements by the oil industry and its advocates, nobody has demonstrated convincingly that widespread economic devastation has befallen our community or south Louisiana or will do so anytime soon.

More definitive, at least to me, is the conclusion made public about a week ago by the federal commission that investigated the Deepwater Horizon disaster.

“The blowout was not the product of a series of abberational decisions made by a rogue industry or government officials that could not have been anticipated or expected to occur again,” the commission says. “Rather, the root causes are systemic, and absent significant reform in both industry practices and government policies, might well recur.”

Nobody wants economic disaster, but nobody wants another person to die or another disruption of life along the coast because of “preventable,” “systemic” flaws in the way companies drill for oil in the Gulf’s deepest waters.

Friction between the need for safety and the desire for dollars is nothing new in the oil business. But the Deepwater Horizon disaster — which killed 11 rig workers, polluted the shores of several states and disrupted millions of lives — elevated that conflict to a much higher level.

Courier and Daily Comet Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com.

<p>I remain skeptical of the stream of gloom-and-doom predictions the oil industry, business interests and Louisiana politicians continue to deliver in the wake of the BP oil spill.</p><p>A report last week by GNO Inc., a New Orleans-area economic development group, reinforces my doubts.</p><p>The study makes a less-than-convincing attempt to quantify the effects of the Obama administration's six-month ban on new deepwater drilling, issued in the wake of the April 20 Deepwater Horizon rig explosion and the massive oil spill that followed.</p><p>In gist, the report acknowledges the drilling ban never produced the widespread layoffs the oil industry as well as GNO Inc. had predicted.</p><p>But, it says, another bogeyman lurks: effects from the dreaded “de facto” moratorium — the slow pace at which critics allege the federal government has issued drilling permits since the ban was lifted.</p><p>That's the latest catch phrase employed by those who want to get back to drilling — and making money — as quickly as possible despite the major safety concerns the oil spill exposed.</p><p>“We conclude that while effects to-date may not be as dire as many Louisianians feared, unless there are significant changes, the future may prove disastrous to businesses, livelihoods and coastal communities,” the report says.</p><p>It says small businesses in particular are having trouble surviving — doing so by borrowing money, reducing workers' hours or cutting salaries — because of the sluggish pace of permitting and resulting slowdown in the Gulf oilfield.</p><p>I'm sure that's happening, but the extent is impossible to discern from the GNO Inc. study. It couches its conclusions in so many disclaimers that it's hard to take its assertions seriously. </p><p>For instance, the study says it is difficult to separate the economic impact of the oil spill, the drilling ban or the “de facto” moratorium because they all happened simultaneously and are “intricately related.” But, based on limited data, it tries to do so anyway.</p><p>The report says the number of approved shallow-water permits reached historical averages in October, when the “de facto shallow-water moratorium ended.” Meanwhile, only two deepwater permits have been approved since October — far less than the 5.8 per month issued during the 12 months before the Deepwater Horizon disaster.</p><p>The study goes on to say it is “difficult to predict the actual number of rigs which would have been in the Gulf of Mexico had the moratoria not existed. Drilling is a dynamic industry, and rigs are built and removed constantly. The number of permits gives us an idea of rigs that would have been added; however, there is no data available regarding the monthly average number of rigs which would have shut down due to normal industry dynamics. Thus, we cannot assume that every permit approved would have increased the total number of rigs working in the Gulf.”</p><p> I do agree with some of GNO Inc.'s conclusions, including the assertion that without stable, reasonable and predictable regulations, the oil industry, along with the businesses, workers and communities like ours that depend on it for their livelihoods, are jeopardized.</p><p>And, to its credit, the group makes it clear that improved safety regulations are needed, acknowledging that the BP well explosion was “a tragic accident that, upon analysis, may have been preventable with different systems and procedures in place.”</p><p>Has the oil spill hurt? Yes. And many of those who have suffered have suffered intensely.</p><p>But despite continued pronouncements by the oil industry and its advocates, nobody has demonstrated convincingly that widespread economic devastation has befallen our community or south Louisiana or will do so anytime soon.</p><p>More definitive, at least to me, is the conclusion made public about a week ago by the federal commission that investigated the Deepwater Horizon disaster.</p><p>“The blowout was not the product of a series of abberational decisions made by a rogue industry or government officials that could not have been anticipated or expected to occur again,” the commission says. “Rather, the root causes are systemic, and absent significant reform in both industry practices and government policies, might well recur.”</p><p>Nobody wants economic disaster, but nobody wants another person to die or another disruption of life along the coast because of “preventable,” “systemic” flaws in the way companies drill for oil in the Gulf's deepest waters.</p><p>Friction between the need for safety and the desire for dollars is nothing new in the oil business. But the Deepwater Horizon disaster — which killed 11 rig workers, polluted the shores of several states and disrupted millions of lives — elevated that conflict to a much higher level.</p><p>Courier and Daily Comet Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com.</p>